Daimler, BAIC to invest 2 billion euros for the production of four new models

An agreement was signed by Daimler AG and Beijing Automotive Industry Corp. to invest 2 billion euros for the production of four new models in China, the expansion of its engine production, and construction of a new r&d center.

Daimler CEO Dieter Zetsche said through a written statement that this investment will enable Mercedes to expand its compact luxury car lineup.

Zetsche said that as early as 2020, sales in China will reach a proportion of at least one in five premium compact cars. Due to this potential, the company is “switching to attack mode” by locally producing its new compacts.

For 2011, Daimler is set to launch the production of the GLK compact SUV, which will be followed by three compact car models beginning in 2013. Daimler has yet to name the three compacts. Daimler has a joint venture with BAIC, named the Beijing Benz Automotive Co.

This venture currently has an annual output of up to 80,000 C-class and "stretch" E-class sedans in China. Daimler said that the output will be increased; however it has yet to say how much will be added to the capacity. The venture also plans to construct a new engine plant that will start making four-cylinder gasoline engines in 2013.

The facility will initially produce 100,000 engines annually, with plans to increase annual production to 250,000 units.

Vehicle testing and adaptation will be handled by the new technical center. It will also take care of r&d with suppliers. Daimler is currently in a very tight three-way race with Audi AG and BMW AG to get the bulk of the luxury market in China.